Smart Company issued $120,000 of10 percent bonds on January 1, 20X1, at 120. The bonds mature in 10 years and pay 10 percent interest annually on December 31. Phone Corporation holds 80 percent of Smart's voting shares, acquired on January 1, 20x1, at underlying book value. On January 1, 20x4, Phone purchased Smart bonds with a par value of $45,000 from the original purchaser for $49,500. Phone uses the modied equity method in accounting for its ownership in Smart. Partial balance sheet data for the two companies on December 31, 20x5, are as follows: Phone Smart Corporation Company Investment in Smart Company Stock $144,000 Investment in Smart Company Bonds 48.453 Interest Income 3.956 Bonds Payable $120,000 Bond Premium 14,647 Interest Expense 9,726 Common Stock 360, 000 100, 000 Retained Earnings, December 31, 20x5 500,000 50,000 Required: a. Compute the gain or loss on bond retirement reported in the 20x4 consolidated income statement. b. Prepare the consolidation entry needed to remove the effects of the intercorporate bond ownership in completing the consolidation worksheet for 20x5. c. What balance should be reported as consolidated retained earnings on December 31, 20x5